Is there a saving to be made changing from Variable to Fixed ?

R

Rael

Registered User
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48
Hi All,

With talk of interest hikes on the way I am wondering if it is worth my while to change my existing BoI Variable mortgages (Rate 2.54%) to 5 year Fixed (Rate 4.25%) given the following criteria.

Mortgage 1 : Family Home -
Current Value approx. €500,000 - Bal Outstanding = €29,000 - 6 Years remaining.

Mortgage 2: Extension to above - Bal Outstanding - €4,200 - 7 Years remaining.

Thanks for any comments.

Rael
 
I would say no unless interest rate increases will overstretch you.

The benefits of the variable rate (flexibility to overpay, redeem early, pay back lump sum) will outweigh the potential savings by fixing.

www.moneybackmortgages.ie
 
Relatively speaking the balance(s) on your outstanding mortgage is quite small (congrats!).

Therefore interest rate increases will not have a huge impact on your existing repayments - for security and peace of mind you could fix the rate - the one downside I see is that it will limit your ability to pay off a lump sum of the mortgage in the interim, as it is likely that you would have to pay a penalty - a potential way around this would be to fix a certain amount of your mortgage say E20k - and leave the balance on variable, that way you'd be able to reduce the variable amount if you felt so inclined over the coming years...
 
Switching to a fixed rate that is higher than your current rate will obviously increase your repayments. You won't even start to make savings until the variable rate hits more than 4.25% . If that doesn't happen for say 2 years - you will be just as likely to end up paying more on the fixed rate as you are to make savings.

As it is only 6 to 7 years left to run - I would stick with the variable.
Find out how much more the repayments would be on 4.25% and stick that into a savings account instead.

www.*****************.com
 
variable to fixed

On the same subject I have similar question if anyone knows please. My bank just issues my loan offer, and all details correct except it says variable instead of fixed. I think this is a typo perhaps we never discussed variable as an option ever! I haven't time to go back to them and ask for them to change the letter as I need to close and haven't time for more paperwork delays.
Can I go variable in this case and in a month or two request to go fixed? I cannot get through to the mortgage provider on phone am on hold forever! If I know I can do this I'll just proceed... any idea ??
 
Can I go variable in this case and in a month or two request to go fixed?
Click to expand...
Most, if not all, institutions allow you to do this by simply filling out a form and returning it to them so I pretty certain the answer is yes.
 
elcato said:
Most, if not all, institutions allow you to do this by simply filling out a form and returning it to them so I pretty certain the answer is yes.
Click to expand...

In most scenarios the answer is yes but I would not go on the advice of an internet forum. Stay on hold and get a definitive answer from YOUR lender.

e.g PTSB will not allow you to fix if your LTV is greater than 50%

There may also be an administration fee charged if you decide to fix in the future.

www.moneybackmortgages.ie
 
Actually yes, NorfBank's point is a good one as I believe Ulster bank are now charging €100 for someone to go from Variable to fixed.
 
I got through to 'a person' in ICS but not a lot of info, only that fixing now is 'new business' and allows me to fix at going rate etc, fixing later becomes 'existing business', and becomes a different situation, he did not elaborate exactly but implied more cost. Am not really any the wiser...
 
Fixed rate will be higher for existing business, if you fix now you are classified as new business so will get a lower fixed rate compared to the fixed rates available for existing business.

Hope this is clear.
 
It will be higher ok. Right well that answers my questions then. Thanks !
 
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